Pushing broadband penetration through InfraCos

The Information and Communications Technology (ICT) is the most transformative innovation of our present generation and its development, even from the earliest days, has benefited from close partnership between government and various private sector companies which has continued to accelerate national development in Nigeria.

Transformation and development are partly determined by the ability to establish a synergetic interaction between technological innovations and human values. Also national development implies a sustainable growth and development of a nation to a more desirable one. National development is people oriented and its success is evaluated in terms of the impact it has had in improving the lot of the masses. Development is essential and critical to growth and sustenance of any country. In order to successfully enhance meaningful national development in all areas of the economy in Nigeria, effective strategies must be evolved.

Hence, according to Research on Humanities and Social Sciences, one of those strategies for national development is the deployment of broadband through technology. The Broadband Commission for Digital Development was launched by the International Telecommunication Union (ITU) and the United Nations Educational, Scientific and Cultural Organization (UNESCO) in response to UN Secretary-General Ban Ki Moon’s call to step up efforts to meet the Millennium Development Goals (MDGs).

Therefore, the Nigerian National Broadband Plan (NNBP), 2013, described broadband as a high-speed communications network that connected end-users at a data transfer speed greater than 256 Kbit/s. This means that broadband within the Nigerian context refers to an Internet experience where the end user can access the most demanding content in real time at a minimum speed of 1.5 Mbit/s which are Digital Subscriber Line (DSL) and Cable Modem amongst others.

Aside helping to boost Gross Domestic Product (GDP) of countries, globally, broadband facilitates e-commerce, e-education, e-entertainment, e-health and e-government – the smart world as it is commonly referred to, where online activities bring about huge efficiencies in daily activities and also create new opportunities.

Greater access to the Internet and broadband applications and services has been found to also help accelerate achievement of internationally agreed development goals, including the MDGs.

As such, after successfully licensing MainOne Cables and IHS Consortium, as two fibre infrastructure companies (InfraCos) for Lagos and North Central zones respectively in 2015, the Nigerian Communications Commission (NCC) and indeed the telecommunications industry are getting set for the final licensing of five more InfraCos in the second phase of the plan.

Specifically, the NCC last week announced that on behalf of the Federal Government of Nigeria, it planned to commence Phase 2 – license of Infracos for North East, North West, South South, South West and South East zones.

The InfraCos, according to NCC’s Director, Public Affairs, Tony Ojobo, will deploy metropolitan fibre infrastructure within its assigned territory on an open access, non-discriminatory, price regulated basis.

Ojobo, who said the Open Access Model has been examined and found to be an appropriate model for optic fibre backbone infrastructure in Nigeria to bridge the current broadband gap and deliver fast, reliable broadband services to households and businesses.

According to him, it is envisaged that this initiative will address the challenges of congested transmission network and also mitigate the challenges arising from infrastructure sharing and Rights of Way issues.

“In this project the Federal Government shall provide financial support in the form of subsidy, which shall be competitively determined to facilitate rollout obligations. The Request for Proposal (RFP) document detailing the commercial principles, key licensing conditions and technical specifications shall be advertised and made available shortly,” Ojobo stated.

Today, from about a meagre of six per cent in some eight years back, Nigeria can boast of 14 per cent broadband penetration, as disclosed by the Chairman of Alliance for Affordable Internet and pioneer Minister of Communications Technology in Nigeria, Dr. Omobola Johnson.

The race before the country, as enshrined in the NNBP is to achieve a 30 per cent broadband penetration by 2018. For a robust industrial synergy, the commission has auctioned some spectrum , including the the 2.3GHz spectrum licensed to Bitflux in February 2014 and the 2.6GHz, which MTN won earlier in the year, all in an effort to accelerate ubiquitous broadband access.

Besides, the country currently boasts of over 11 terabytes of Iinternet bandwidth in-country capacity brought about by the landings of several high capacity submarine cable systems that have slashed wholesale international bandwidth cost by well over 42 per cent in the past years.
Pattern of services

The InfraCo licensees, according to the regulator, are expected to deploy Metropolitan Optic Fibre Infrastructure and Associated Transmission Equipment on an open access, non-discriminatory price-regulated basis in the state and region respectively.

The commission had stated that the open access model has been considered as a strategic means for the deployment of optic fibre backbone transmission infrastructure network in Nigeria.

According to it, this is expected to bridge the current broadband gap in the country, facilitate the development of local content and deliver cost effective services to households and businesses.

As such, the success of the process would address the challenges of fibre deployment in towns and cities, promote infrastructure sharing, reduce RoW issues and transform the beneficiary states to smart states, among others.

The activities of the InfraCos shall be complimentary to the existing integrated operators that offer end-to-end services and long distance operators offering whole sale services, even as the licensees are also expected to specifically bridge market gaps in the metropolitan and regional fibre segment as well as provide end-to-end transmission services, to be available at point of access (PoAs), to access seekers.

ChallengesTo market observers, the challenges before the InfraCos are enormous and such would require concerted efforts to overcome.The argument, according to them, is the current economic recession in the country, which has impacted the voice and data revenue by as mush as 50 per cent.

To make matters worst, the industry’s Average Revenue per User (ARPU) has shrinked considerably. The Guardian gathered that the index dropped sharply from N3000 in 2001 to N500 in 2016, due mainly to the dwindling disposable income of subscribers amid the harsh economic climate.

Besides, a source in one of the GSM companies in the country corroborated the dwindling ARPU fall by saying “for instance, in January and July 2015, it fell by 21.7 per cent and 15.7 per cent, a pattern that repeated itself in 2016.”

Indeed, chief of the challenges before ubiquitous broadband in Nigeria is ineffective distribution and transmission of the available bandwidth inland. This has continued to make accelerated expansion of broadband Internet access at more affordable end-user price a major challenge and a barrier to faster realisation of the desired boom in the country.

Though, the market is here, a telecoms expert, Kehinde Aluko argued about the awareness strategy of both regulator and players’, especially getting people in the hinterland acquinted about the benefit broadband holds for them as individuals.While some states including Lagos, Ondo, Bayelsa are commendable for reducing RoW levies, other states still see telecoms firms as ‘cash cow’ that must be milked.

Besides, the country is still provides shelter for vandals. Vandalism has become another challenge operators will continue to cope with as no law currently looks into that.

Incentives for operatorsThe InfraCo regime is being supported by the government with the hope that the licensees would accelerate the country’s drive towards pervasive broadband access. Hopefully, if it still stand, the InfraCos are to be given tax holidays of between five and seven years to cushion the burden of their capital investments, which is to encourage them to invest in areas, where many consider being less commercially-rewarding.

Former Communications Technology minister had said that the licensees will also be granted pioneer status as part of the incentives to boost their interest in investing in such areas or zones that may look unattractive. This is in addition to other incentives that could be up to 30 per cent mark up on their capital expenditure (CAPEX) and employee tax holidays as well.

Operators’ roadmapsMeanwhile, the MainOne Consortium and IHS have explained what their roadmaps would look like as Infraco licensees.Revealing MainOne’s blueprint as InfraCo licensee, to The Guardian, the company’s General Counsel, Kazeem Oladepo, said, the Lagos InfraCo License document was recently released in the month of July, 2016 with an effective date of 1st of July, 2016.

According to him, the consortium members had been engaging prior to issuance of the license on the critical path to deployment of the required infrastructure in accordance with the bid undertakings. We have made significant progress with Lagos State Government and its broadband infrastructure management company (Ibile Broadband) to harmonize the InfraCo fiber build with Lagos State’s Smart-City Project.

Pending issues, according to him, include the completion of the commercial agreement between the InfraCo Nigeria Consortium and the NCC, and also finalization of our agreements and permits with Lagos State Government/Ibile Broadband. The commercial agreement with the NCC would regulate the build and operation of the broadband network and infrastructure including specifying terms for the subsidy payment.

He said MainOne planned to break-ground during Quarter 4, 2016. “We have made significant progress in terms of planning (corporate, financial and technical) to operationalize InfraCo Nigeria Limited and have commenced the ordering of some of the long-lead items such as fiber optic cable, which was recently delivered to our warehouse in Lagos. We will be ready to start deployment within 30 days of execution of the commercial agreement with the NCC, hopefully, during the month of September.

The Company Secretary of IHS, Jimoh Umoru, last year also succinctly captured his company’s roadmap as an InfraCo licensee.“We would focus on putting smiles on the faces of businesses and end users of broadband services. We would provide affordable and resilient broadband infrastructures to our customers to deliver on our mandate: bridge market gap in broadband provisioning.”